Doctoral Dissertation Research: Sovereign Wealth Funds, Dependent Development, and the New Alliance Capitalism

Clark University, Worcester MA

Investigators

Abstract

Sovereign wealth funds (SWFs) have grown rapidly in recent years in both value and number. Despite a great deal of popular debate, very little scholarly attention has focused on the "strategic use" of SWFs by nations as tools to promote national development. Such usage is particularly significant in the context of globalization and financialization, which pose challenges to traditional industrial policy tools used by developing countries to improve their position in the international division of labor. This doctoral dissertation research project will undertake one of the first detailed empirical and theoretical examinations of strategic SWF investment. The doctoral candidate conducting this project will seek to answer the following three questions: (1) How and to what extent are states employing SWFs strategically to achieve national developmental objectives? (2) How are patterns of strategic SWF investment shaped by processes of negotiation and coalition formation involving multiple state and non-state actors based in different countries? (3) What are the policy and theoretical implications of strategic SWF investment for development? The student will conduct case studies of the strategic use of SWFs by Singapore, China, Abu Dhabi, and Dubai using a methodology of "network mapping" in order to analyze the extent and nature of strategic SWF investment originating from these states. In addition, semi-structured interviews will be conducted with a particular focus on the SWF-mediated relationship between Abu Dhabi and Germany. These interviews will facilitate development of a deeper understanding of the political and economic dynamics of strategic SWF investment and its implications for late development. Strategic SWF investment is hypothesized to be an adaptive response by states managing processes of "dependent development" in the context of contemporary globalization, entailing the convergence of emerging network or catalytic forms of statehood with private sector trends towards cross-border "alliance capitalism." Project results will contribute to a deeper understanding of the dynamics of strategic SWF investment as well as potentials and limitations inherent in strategic SWF investment as a developmental tool. This project thereby will improve general understanding of the diverse forms of institutional and policy adaptation that states in the developing world are undergoing in the context of globalization and the significance of these changes to their abilities to affect successful developmental outcomes. The project also will inform policy debates over which SWF investment strategies are appropriate from the standpoint of host economies. These debates have been associated with a great deal of apprehension in the western world, but have had limited substantive grounding. By helping to provide this grounding, this project will enable citizens and their representatives to make informed decisions regarding whether, and under what conditions, inward investment by foreign SWFs should be welcomed, opposed, or treated with indifference. As a Doctoral Dissertation Research Improvement award, this award also will provide support to enable a promising student to establish a strong independent research career.